To follow latest discussions about nudging in Sweden – join the network group on Facebook

Month: December 2014

The fox wanted the grapes, butwhen she found she couldn’t reach them she decided that they were probably sour, so she revised her original intention and believed that she never really wanted the grapes in the first place.

– The fox and the sour grapes, Aesop’s fable

One more year has passed and hopefully you have become wiser in life. You have not done the same mistakes like the year before, you know how foolish it is to do the same mistake twice. You have handed in all deadlines in time, you have ended all bad habits and you have never been to fatigue to care about your beloved ones.

Every year there is a constant strive to improve us to the next. New Years resolution is an excellent way to give us bad conscious. We set goals for the coming year, but do we act with them?

We all know that we sometimes cave into urges and don’t always do what we planned and we follow old habits even though we know they are bad for us. Our capacity to make decisions has limitations and we tend to use heuristics (i.e. mental shortcuts) in our everyday decision making Simon (1990). It seems to be very hard for us individuals to accept that we not all the time act with our intentions. When you look back on 2014, what would you remember? What are your best and worst moments? Is it the ones that Facebook would summarize, or is it the ones that social norms and society would define?

When you scrutinize yourself and the year, would you be grateful of your success stories or disappointed of that you haven’t accomplished?

There appears like we accept ourselves when we act in line with the rational Home economicus, but there is important to understand that happiness do not correspond to utility Clark et al. (2008). Happiness is subjective and very hard do define. If we would be more accepting towards our inadequacies and be more satisfied with out actions, would we be happier?

What if we could use cognitive biases to our advantage and with this be more satisfied with ourselves? I will give you my New Years Resolution “nudge”. It might be self-serving to argue for the benefits of mental shortcuts. But it helped me to be more satisfied with myself this year. I want to encourage you to accept your own decisions and that it’s fine to change your beliefs.

The fox and the sour grapes is a story that capture the psychological theory, cognitive dissonance, where people change their beliefs in order to reconcile with their past actions and behaviour Festinger (1957). We fall for self-deception and do not see things for what the really are, irrational behaviour. The theory states that people are motivated to avoid having their beliefs in a dissonant or conflicting relationship, and that we feel uncomfortable when dissonance occurs. But the brilliant function of cognitive dissonance is that it is much easier to change your beliefs than your actions. Even though it is obscuring the realities of situations and could lead to bad decisions it still is one way to bolster self-esteem and increase the sense of wellbeing, or even increase happiness.

So, – Did you accomplish all your New Years resolutions? Don’t forget to have The fox and the sour grapes in mind, it might nudge you to be more satisfied with the year.

In Sweden we have an alcohol monopoly, where only the store called Systembolaget is allowed to sell alcohol. Stated at Systembolagets webpage, it exists for one reason: “To minimize alcohol-related problems by selling alcohol in a responsible way, without profit motive.” During Christmas this year, they have a campaign with a message on their plastic bags stated as follows:

“ The fact that we are the only one that sells beer, wine and liquor is a bit uncomfortable for you. But this is what you contribute to this year:

About 2000 saved lives

About 20 000 less violence crime

About 11 million less sick days”

Now… From a behavioural perspective, how does this make you feel? Perhaps I’m the only one, but this text actually puts me in a mood that make me feel – Yay, I just bought something for a good cause! Great, this justifies my alcohol shopping… Well, let’s be frank, I don’t think that’s the intention with the message.

Research led by Prof. Robert Cildini at Arizona State University proves that nudges can indeed backfire. In a national park, the research team tried to stop people from stealing petrified wood by posting: “Many past visitors have removed wood from the park, changing the state of the Petrified Forest”. But, with this warning, theft rates still stood high. So they changed the sign: “Your heritage is being vandalized every day by theft losses of petrified wood of 14 tons a year, mostly a small piece at a time”. Surprisingly, this warning influenced theft – but not in the intended direction: stealing jumped from 5 percent to almost 8 percent. The researchers concluded that the message people received was not “don’t steel the petrified wood” but rather “Stealing petrified wood is a common and socially acceptable behaviour.” This research proves that the intended effect the nudges can truly backfire. It emphasizes (as always) the importance of experimental testing thus, behavioural response to nudges can be unpredictable and very context depended.

I assume, that the intentions behind Systembolagets campaign are in line with the reason of why they exist, again: “To minimize alcohol-related problems by selling alcohol in a responsible way, without profit motive.” Maybe the campaign does work, we don’t know, as it’s most likely not tested.

But… According to me, from a behavioural perspective this is not a responsible campaign as it gives you a positive feedback holding a bag of alcohol. Hypothetically, this type of nudge may backfire making consumption of alcohol unintentionally justified as a good cause and consequently increase those numbers stated on the bag for next year…

An odd title, I know, but it refers back to an article a colleague blogger of mine wrote a little while ago, titled: So when is it legitimate to nudge? In this post, Linda writes a bit about paternalism, and concludes that: ” …perhaps a more accurate debate regarding this critique [nudging being paternalistic] would be the question if paternalism is justified at all? And that’s another debate…”

It is time to have this other debate, I think. The paternalistic aspect of nudging is a thorn in the eye of many critics, of which Robert Sugden is one of the most eloquent and clear. Not only does Sugden write clearly, his critique on nudging makes even the most devout nudger doubt his or her own convictions. And truth be told, the paternalistic tendencies of nudging are indeed a disturbing factor in the whole concept of nudging. It is because of this that I think it is time to have this debate about paternalism, and I will use one of Sugden’s work as inspiration (see the reference list). Mind you, if you do not like to hear critique on nudging, because you are absolutely convinced about its brilliancy, then don’t read this blogpost. It will be a waste of time at best, and depress you at worst. If you are, however, a critical thinker, I invite you to read on, and reflect.

Once upon a time…

Before hearing Sugden speak, let’s reiterate what Thaler and Sunstein wrote in their Nudge book (Thaler & Sunstein, 2008). They define a choice architect as “[having] the responsibility for organizing the context in which people make decisions.” Everything in the context matters, and a decision or behaviour always has a context. In a very recent paper on ethics, Sunstein elaborates on this even further, emphasizing that “When people make decisions, they do so against a background consisting of choice architecture” (Sunstein, 2014). So far there is little to argue against. What is basically said is that no one operates in a void, and I think any sceptic would have a hard time arguing against this. However, the problem of many a critic, and Sugden is among them, is in the conscious role of a choice architect. Again speaking in the words of Thaler and Sunstein’s book: “[they] argue for self-conscious efforts, by institutions in the private sector and also by government, to steer people’s choice in directions that will improve their lives … that will make people better off judged by themselves” (italics in original, p. 5).

Earlier we read that people are pretty incapable of doing so, unless we have full cognitive abilities, complete self control, complete information, attention and time. So, assuming we had all that, then the decision we would make in such a situation, is the one choice architects ought to endorse. So far so good…

Or is it?

Nudges make people better off, as judged by themselves?

How are choice architects to know what people would do if only they had the time to think? If we maintain this ideal, then a lot of nudges that induce pro-social behaviour ought to not be developed in the first place. After all, for any individual it can be rather detrimental to spend time recycling their newspaper, automatically donating money each year to Greenpeace and spend well-earned payments to eco-friendly products. Instead, these people could spend their time working (earning money), or saving money for their own retirement. In fact, many of the default nudges Thaler and Sunstein describe are favouring retirement funds over other expenditures. But isn’t a nudge that makes us more ‘pro-environmental’ or ‘pro-social’ also desirable? Fully rational people think about the future, right? I am not trying to be judgemental here, the point is: it is rather (extremely) difficult to assess what people would judge by themselves.

In fact, even if people are fully capable (time wise and what not), they would probably not be able to make a choice, because at which time frame are we considering? Sure, saving for retirement is nice for me, later on, but saving the planet is nice for my kids, later on, and having a big-ass tv is nice for me and my family, over Christmas! And even if a single individual could make this decision, that is not to say others would come to the same conclusion. Personalities differ, people differ. Some persons might ascribe great value to family occasions, and so the tv is much more important to them than their retirement, or their kids (which they might not even have).

But, Freedom of Choice…

Yes, freedom of choice. Nudges are, in principle, never obstructing people’s freedom of choice. Even if our automatic debit to a good cause is making sure we pay our donation every year, this is on no occasion obstructing our power to choose to do otherwise. Sugden’s main critique is hinged on this, that nudges are assumed to be better than non-libertarian paternalism (strict laws, rules and such) because the freedom of choice demand restricts excesses of paternalism. Sure, good idea, but, in words of Sugden himself: “if that condition [freedom of choice] is weakened to the principle that the costs of paternalism bust be small relative to the benefits, definitions of ‘cost’ and ‘benefit’ are essential.”. (Sugden, 2009, p.370). Essential, yes, and lacking…

We cannot talk about normal costs and benefits, of course, because those terms are linked to having a preference structure (which people don’t, hence the need to nudge them). Rather than this, choice architects will need to develop other ways to ‘divine’ the choices people would otherwise make, if only they had time, cognitive capacity, self-control and perfect information. Still, so Sugden argues and I cannot but agree, these concepts all do not have any strict definitions. In other words, they are quite normative. In even other words, how these are assessed (and consequently which behaviour is seen as the desired outcome) depends very much on the choice architect’s definitions of self-control, capacity, and information needs. So the inevitable conclusion is that the nudge is not the behaviour best, as judged by the person being nudged. It is the behaviour as judged best by the choice architect.

So strangely, while the idea of nudging is borne out of an acknowledgement that we are not homo economicus, it seems that we do still need this homo economicus to figure out the desirable behaviour. Sugden, as well as Thaler and Sunstein, I dare-say, all agree on the notion that this is just not very realistic. Nudges, instead, ought to be used for behaviour for which people really do lack feedback or expertise needed to make sound choices. I agree, in such cases it is definitely nice to have nudges to guide my behaviour. But as for choice architects, these guidelines are not very concrete, are they. What kind of behaviour is to be nudged?

There are obvious behaviours that are wrong, though!

Agreed, certain behaviours have the numbers against them. Smoking, over-eating, drinking (alcohol, mind you) and drunk driving are all examples of behaviour that is pretty risky, if not for an individual, then at least for society. But is this behaviour that is bad, as judged by themselves? Suppose a person makes a very rational cost-benefit analysis, and decides that whatever the costs, smoking still is the thing for him/her?

Statistics may help. We know that for most people, it is good to eat a bit less, and to refrain from smoking. Moreover, it is better for society at large, as the medical costs will be reduced and so more money can be spent on other illnesses or research. Still, this is nudging as judged by use to society, not for the individual. Then there are nudges for the sake of the environment. I completely and wholeheartedly endorse such nudges, myself, by the way. I must come clean there. But in many cases, these nudges are not better as judged by individuals. They are, however, better for the environment (or at least aspire to be).

So judged by whom?

Let us assume that we are not nudging people in a behaviour better as judged by themselves, but for the sake of society at large, of the environment. Assuming this, another important question arises. Who has the expertise to identify which behaviour is better? Some nudges may be evident (there are hardly any costs to nudging people to recycle more, for instance, by adding trash-shaped lids to waste bins) but other nudges may be less so (who is to say that it is good to invest your money in fixed-interest bonds, as Thaler and Sunstein suggest in their book?).

Sugden rounds up with the statement that the concept of nudging seems to not notice, or acknowledge, the lack of precision in criteria required for assessing if nudges are needed, and in which direction they ought to nudge.

But… but… this blog is pro-nudging!

Yes, and what of it? I do hope the reader is, after reading this blog entry, not depressed or convinced of the corruption and perdition of nudging. I think that all previous posts have made it blatantly clear how useful nudging can be. Even the beginning of this article stated as much, and it still holds true, every context nudges, and so it is unavoidable. What this article points out is that there are some flaws (or not even flaws, maybe just small ‘uncomfortabilities’) in the idea of nudging that require our attention. It does not mean that we should throw away nudging altogether, it merely means we should not idolize it. Critical reflection is the way to go.

That said, I think we all acknowledge and agree that nudges have their time and place, and in other places either anarchy or strict regulation is more appropriate. However, urgent questions remain: what is the place of nudges? And how do we nudge people towards behaviour better for them, and who judges what is better? Who, moreover, judges which alternatives are acceptable, in order to maintain and satisfy the need for freedom of choice?

As a final quote for you to think about on your way to an afternoon coffee: Sunstein and Thaler (2003) stated: “Libertarian paternalists want to promote freedom of choice, but they need not seek to provide bad options,…” Mind you, only reasonable options are allowed.